CBS (CBS)

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See all Bulls Reasons Bulls: Reasons To Buy CBS Radio cleaning up and reaching out to improve revenue 0% agree CBS Radio cleaning up and reaching out to improve revenue CBS Radio will benefit from changes in format, selling of low-margin stations, and usage of new media to increase scope and reach. View or Edit Reason 0 votes 0% agree The CBS Outdoor division is experiencing strong growth by going foreign 0% agree The CBS Outdoor division is experiencing strong growth by going foreign The CBS Outdoor division is experiencing strong growth by expanding into previously untapped foreign markets. View or Edit Reason 0 votes 0% agree CBS's lead in new media necessary for strong future advertising revenues 0% agree CBS's lead in new media necessary for strong future advertising revenues CBS is the leader in assimilating digital and other forms of new media to traditional media and this will be essential in maintaining strong future advertising revenues. View or Edit Reason 0 votes 0% agree See all Bears Reasons Bears: Reasons To Sell Trends show an increase in time shift programming 0% agree Trends show an increase in time shift programming Trends show an increase in time shift programming (i.e. allows for fast forward) and this may decrease advertisers’ willingness to purchase advertising. View or Edit Reason 0 votes 0% agree Slightly declining ratings may negatively affect advertising revenues 0% agree Slightly declining ratings may negatively affect advertising revenues CBS Network is experiencing slightly declining ratings which may negatively affect advertising revenues. View or Edit Reason 0 votes 0% agree CBS's Publishing business may be dead weight 0% agree CBS's Publishing business may be dead weight CBS’s publishing business may be dead weight as it only offers low marginal growth in a business that is rapidly becoming more competitive. View or Edit Reason 0 votes 0% agree Send the authors a comment or suggestion CBS is the main network of the Big 3 that I like to watch. Love those crime dramas! I would like ... more [Dismiss] [Done] See All Suggestions

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CBS Corporation (NYSE: CBS, NYSE: CBS.A) is a leading international mass media (television, radio, publishing) conglomerate. The CBS network is ranked number one on the ratings and is actively working to further diversify its programming (moving away from crime dramas).

CBS is at the forefront of combining new forms of media (cell-phones, LCD displays, etc.) with traditional media (television, radio, etc.). Recent management changes occurring between 2006 and 2007 include the hiring of top-level executives from Yahoo! and Google to head the interactive and nontraditional media sectors. CBS has also been investing heavily in new forms of media that include digital billboards, streaming content online, and transmitting to mobile devices.

In an effort to increase profitability, CBS is selling many of its small and midsize market radio and television stations in order to concentrate on larger market size stations. Furthermore, CBS is advancing towards the expansion of its Outdoor division into international markets.

After Viacom and CBS became separate entities in early 2006, the new CBS Corporation established itself as a media and entertainment conglomerate.

[edit] Revenue generating sectors

The above charts show the breakdown of CBS's 2007 revenues and compare total revenues to previous years. As is shown by the segmented chart, advertising represents the majority of CBS revenue. The advertising is principally associated with the automotive, financial and pharmaceutical industries. In 2007 ad sales decreased 3% in part due to radio and television divestitures during that year.

[edit] Television

The company's television segment is its largest revenue driver, bringing in 66% of total revenue in 2007. The television segment is comprised of four subdivisions which include: CBS television network, CBS Paramount Network Television and CBS Television Distribution, Showtime Networks and CSTV College Sports Television.

CBS television network maintains the highest household ratings and greatest audience share for adults aged 18-49. CBS has a 50% share of the CW network, which is accounted for as an equity investment. The company shares control of the CW network with Time Warner (TWX), which controls the remaining 50% share. The CBS Paramount Network Television and CBS Television Distribution provides the company's television production and syndication operations. The Showtime Networks are CBS's premium subscription television stations. The Showtime channels provide commercial free media for subscribers and are mainly focussed on films, but also include sporting events and network series. CBS's CSTV Networks are the company's cable network and online digital media outlets that are devoted to college sports. These networks were re-branded as CBS College Sports Network in March 2008.

[edit] CBS Television Revenue Sources

Advertising Revenue: 72% of CBS's total 2007 revenue was generated by advertising. This dependency on advertising leaves CBS especially vulnerable to the proliferation of new media formats that allow consumers to time shift programming (i.e. fast forward) and thus may reduce advertisers’ willingness to purchase advertising (though current estimates of time shift programming availability/usage are relatively low).

License fees: Television licensing fees generated 10% of total revenue in 2007. These revenues are generated through the CBS Television Distribution Group and CBS Paramount TV.

Affiliate fees: These revenues are generated through the Showtime and CSTV networks. In 2007 affiliate fees accounted for 8% of total revenue.

Home Entertainment revenue: The licensing of home video rights for CBS content is accounted as home entertainment revenue. In 2007 home entertainment revenue was responsible for 1% of total revenues. In 2007 home entertainment revenues increased to $201.9 million from $83.4 million in 2006. This increase was largely due to DVD sales.

[edit] Audience Acceptance

Predicting the level of audience acceptance of content in television and radio programming is very difficult and hence there are many flops. Also, with such high competition for an audience's attention, releasing a program during the same time or around the same time as another high quality show from a competing show may result in hindered performance, despite the program's high quality. A fair portion of revenue is dependent on the library of television programming CBS maintains (past programs, etc.), which must continuously be filled with popular content (a difficult task in and of itself), and failure to maintain it would adversely affect revenues.

[edit] Radio

CBS's radio operations include 140 radio stations, which are geographically diverse and serve a demographically diverse consumer group. In 2007 the radio segment generated 12% of total revenue for CBS. The company targets the largest radio markets in the U.S. with 76% of its stations in the top 25 domestic markets. Formatting includes adult contemporary, oldies, rock, country, all-news, talk, sports/talk, and jack (“play anything”). CBS Radio has leading franchises in the most-listened genre of formatting in the past two years: news, talk and sports. CBS Radio is making rapid movements towards creative programming and advanced delivery methods which include online streaming, HD radio and podcasting (including a relatively new radio station, KYOURadio, that primarily uses podcasts to broadcast). As of February 2008 103 of the CBS radio stations had been converted to the digital HD service and plans to convert more stations are in place. Furthermore, CBS Radio has advanced broadcasting through select Sprint mobile phones which allow for reception of its top 3 sports stations.

[edit] Outdoor

CBS Outdoor is the world’s third largest out-of-home media company, with over 2 million displays around the world including operations in most of North America’s largest metropolitan areas. These displays are made on billboards, buses, trains, mall kiosks, stadium signage and transit shelters. CBS Outdoor is making acquisitions to push itself into major markets around the world. Recent acquisitions include Haveco, a specialized Sports Stadium Advertising company in Ireland; 70% of Magic Media with an option to buy the remaining 30% in the next 5 years and Pass Affiches Company, a billboard company in France. Other international operations include displays in Netherlands, Italy, and Spain. CBS is aggressively moving to the use of digital products by creating digital billboards that will convert static displays into LCD (liquid crystal display) boards. The rights needed to maintain advertising in prime advertising space are not secure and failure to obtain these rights could lead to a fair reduction in revenue.

In early September 2007 CBS announced that it would buy an in-store programming and advertising company, SignStorey, for $71.5MM in cash. SignStorey is a leading provider of in-store displays, located in over 1,300 stores (mainly groceries) nation-wide including 6 major grocery chains. Upon the acquisition, which is scheduled to closed in the fourth quarter of 2007, SignStorey was be renamed "CBS Outernet".

[edit] Publishing

CBS Publishing falls under Simon & Schuster, a publishing company with publishing and distribution rights for over 17,000 titles distributed domestically and internationally. CBS publishing is in a highly competitive business and is CBS’s lowest-margin division. In 2007 publishing accounted for 6% of total revenues.

[edit] New Media

Though currently not one of the core revenue generating businesses, it is important to mention the aggressive expansion of CBS into new forms of media. CBS is the market leader in new media adoption. CBS has created a new division named CBS Interactive and lured executives from Yahoo! and Google to run it. New media includes all forms of interactive media such as the Internet, mobile devices, and video games. A few of CBS' new endeavors include CBS Mobile, CBS Always On (will increase interactivity and distribution of television content through different mediums), Mobizone (will allow mobile users to download free clips from billboard locations), CSTV Network (offers extensive college sports content), and CBS RIOT (new platform that connects the Radio, Internet, Outdoor and Television sectors to allow advertisers to more conveniently increase their reach on a local scale).

[edit] Trends and Forces

• Advertising Expenditures: The increase of new media formats that allow consumers to time shift programming may reduce advertisers’ willingness to purchase advertising. Currently, 13% of households have time-shifting technology but it is believed to reach 20% by the end of 2007. Despite this, television is still considered the most effective medium through which an audience is reached and current studies of time-shifting technology show that not all commercials are skipped.

• Changes in the Legislation: For the media industry in general, changes in the law proposed by the FCC, US Congress, and/or International laws, may adversely affect revenue by forcing companies to change their format or by prohibiting certain forms of revenue. For example, recently the US Congress proposed a law that would allow for free or a reduced charge to political candidates. The FCC found that unbundling packages of cable services may be beneficial to consumers, but this would create greater competition between channels and could adversely affect revenue.

• CBS-AOL Merger: CBS Radio (CBS) and Time Warner (TWX) under AOL Radio are combining opertations. CBS radio indicates that this is big push in the high growth market of streaming radio. The managements comments include that partnering with AOL will help them achieve pursuits of their own, provide massive exposure to opportunities to scale and this deal would make them leaders in this high growth market. The streaming radio business has saw $1.6 billion in revenues in 2007. While Sirius (SIRI) and XM Satellite Radio Holdings (XMSR) struggle to gain merger approval, CBS and AOL have come together to form what they term as a leadership position with massive distribution abilities.

[edit] Comparison to Competitors

Management Comparison: CBS has made many changes in management and this has definitely been reflected on its strategy. Management has rapidly sold many non-core traditional media (especially low and midsize radio and TV stations) and is setting itself to invest in fast-growing new media. The CBS network management team has proven itself against competitors to be more risk-taking and more innovative in its thinking.

[edit] Television

CBS Network ratings are at the top of the rankings. Other networks such as NBC and ABC tend to depend on the popularity of one or two shows, but CBS maintains 9 of the top 20 primetime shows. Furthermore, decreases in ratings at other networks have been greater than at CBS.

Television Network Ratings

Note: Average weekly primetime viewers, season-to-date through March 9, 2008. Source: Nielson Media Research

[edit] Earnings Comparison

[edit] References